Paying Off $5,500 in Credit Card Debt – We all love the inspiration that forces us to evaluate our goals and take action. And learning how others pay off credit card debt is always something to aspire to! Today, we have a guest post from an upcoming blogging rockstar, Chris – who happened to dig himself out of $5,500 of credit card debt after college. I love reading and sharing debt-freedom stories. If you have one you would like to share, feel free to shoot me an email at lifeandabudget (gmail.com). I would love to have you. Without further interruption from me, take it away Chris!
My Journey in Paying Off $5,500 in Credit Card Debt
Do you ever get excited when it’s that Friday of the month you get paid?
I know I do! I even went the extra mile of setting up my paycheck to get directly deposited to my checking account.
But how much of our hard earned money do we actually keep?
It would be nice to say 100%, but even after “Uncle Sam” (the government) gets his piece of the pie we still end up paying others.
A study from the Wall Street Journal stated that roughly 2/3 of millennials from the ages of 23-35 back in 2012 had at least one source of long-term debt.
So if you have hundreds, or even thousands of long-term debt what can you do?
This article won’t have a “cure-all” strategy, but hopefully after learning how I finished paying $5,500+ in credit card debt you can become inspired to the same.
Coming straight out of college I had student loans like many other millennials, and to make matters worse I piled up unnecessary purchases.
The result of this was maxing out multiple credit cards.
At one point It almost felt normal just paying my monthly credit card statements, and carrying on with my life. For example, I would pay $100 to my Macy’s credit card, $75 to my Chase credit card, and $150 to other cards.
It didn’t strike me until I saw one of my credit card statements that asked $70 solely for interest. It was at this moment that I knew I had to change my spending habits.
It’s amazing what you can discover when you break down your personal cash flow on paper. My results stated that I was spending about 70% of my paycheck on bills, and that wasn’t including what I had to pay in taxes!
Before I took any action I brainstormed the best available options to pay off my debt.
By working as a teller for many years during college, I had the opportunity to learn all about the different credit cards available. Using this to my advantage I quickly applied for a Bank of America credit card that gave me 0% interest for 18 months.
To my surprise I was approved for a higher limit than I had anticipated, so after being approved I consolidated $5,500 from several of my credit cards. By consolidating most of my credit card debt into 1 single credit card I was able to breath better.
Sure I was staring at a higher credit card balance, but I didn’t have to spend too much time thinking about which credit cards I had to pay each month.
After becoming familiar with my cashflow I quickly noted that I had $200 in excess cash each month. Instead of going to the mall, or out with friends every weekend I decided to use this extra cash to pay off my credit card.
Following this strategy, I knew it would take approximately 20 months for me to pay off all my credit card debt. It was daunting to discover that it would almost take 2 years to pay off my debt, but I was committed.
For the first time, I started to see results! My initial $5,500 credit card balance was down to $3,850 in 6 months.
I still had a long way to go, but I was driven by my results. Although I was making progress, I wanted to move a little faster.
To gain some extra cash I started selling anything I could think of on eBay. I searched my whole house for games, books, etc., and managed to make an extra $50-75 in some months.
Fast forward 15 months, and I finally had dropped my balance down to $0! I wish I had documented this date so I could celebrate each year.☺
Some of the key components to my success were consistency, and a mindset change. If I had decided to take a month or two off, then I would have most likely finished after the 0% credit card promotion.
Keeping your Cool
After reading my success story it may appear like I didn’t struggle, but I lost my cool a couple of times. It’s wasn’t the sexiest thing to pay off my debt, and many times I found myself feeling stressed that most of my money went to bills.
To avoid burning out, I quickly learned I needed a purpose for doing this. I wasn’t just motivated to pay off $5,550 in credit card debt — I was determined to gain complete control of my finances. I didn’t want to live paycheck to paycheck for the rest of my life.
As you start paying off your debt ask yourself the following question:
If you had no debt, what would you do?
The answer to this question will be unique to you, and it will help you stay motivated on the days you feel like throwing the towel.
The best part of paying off $5,500 in credit card debt was the person who I’ve had to become in the process. I learned how to stay disciplined, and became more financially savvy.
Although today I still over spend my budget on certain weekends, I know that I won’t let myself get into thousands of dollars in debt once more.
Selling items on eBay was good while it lasted, but after running out of items to sell I knew I needed another way to make additional income. I searched for knowledge by reading books, listening to podcasts, seeking mentors, and changing my morning habits.
I became hungry for knowledge on the different ways to build passive income. I eventually learned about real estate investing, and different ways to monetize a blog. Till this day I’m learning daily from other investors, and entrepreneurs.
It took me getting into thousands of dollars in debt before I realized I needed to take action. I still have a long way to go before I’m completely debt free. However, I’m confident that because I’m taking action daily I will eventually get there.
I hope this article motivates you to start paying off your debt. The hardest component of paying off any debt is consistency.
You should start paying an amount you’re comfortable with initially, that way you’re more likely to stay consistent. Once you have a level of consistency you can try increasing your monthly payments.
Once you start paying off your debt you may ask questions like:
“How can I pay off my debt quicker?”
“How can I avoid ever getting in debt again?”
Although you might not have the answer to your questions right away, you’ll eventually stumble upon them. Most of us are never taught how to effectively manage our money, but that doesn’t mean you need to lose hope.
Take a brief moment to jot down all of your debt, and start tackling it one step at a time.
I wish you the best on your debt free journey!
So, what’s your method for paying off credit card debt? What does financial freedom mean to you?
Chris is a young millennial working in the corporate IT world by day, and he is an entrepreneur by night. He has gained vast knowledge on how to become financially independent and is happily sharing his experiences. Will trade passive income tips for flaming hot Cheetos. His Motto is: “Fail often so you can succeed sooner.”